The purpose of the following paper is to illustrate different leadership styles have different effects on a company, as an example of Microsoft and an analysis on how managers change management.
The overall approach takes the collection of primary data (specifically from a corporate website) as a fundamental step in the research process.
Microsoft is a multinational computer technology corporation. The history of Microsoft began on April 4, 1975, when it was founded by Bill Gates and Paul Allen in Albuquerque.1 Its current best-selling products are the Microsoft Windows operating system and the Microsoft Office suite of productivity software.
In 1980, Microsoft formed a partnership with IBM that allowed them to bundle Microsoft’s operating system with IBM computers, paying Microsoft a royalty for every sale. In 1985, IBM requested that Microsoft write a new operating system for their computers called OS/2; Microsoft wrote the operating system, but also continued to sell their own alternative, which proved to be in direct competition with OS/2. Microsoft Windows eventually overshadowed OS/2 in terms of sales. When Microsoft launched several versions of Microsoft Windows in the 1990s, they had captured over 90% market share of the world’s personal computers.
The company has now become largely successful. As of 2013, Microsoft has a global annual revenue of US$ 77.85 billion and nearly 110,000 employees in 105 countries. It develops, manufactures, licenses, and supports a wide range of software products for computing devices.234 1. The differences in leadership styles between Microsoft CEOs Satya Nadella and Steve Ballmer.
1.1 Steve Ballmer
Steve Ballmer is known as a ferocious defender of Microsoft’s interests, he has an energetic and exuberant personality who is good at motivating employees and partners. On the other hand his persona has been at times detrimental to the company’s business, since this attitude has led to a number of mistaken business decisions, like the forced takeover of Nokia in 2012.
Ballmer earned a bachelor’s degree in mathematics and economics from Harvard University. He worked for two years at Procter & Gamble Company as an assistant product manager and attended Stanford University Graduate School of Business. In 1980, he joined Microsoft and was the company’s first business manager. Before 2000, his roles at Microsoft are senior vice president of sales and support, systems software and marketing. Then, Ballmer was retired as CEO of Microsoft from January 2000 to February 2014.
Under Steve Ballmer’s leadership, Microsoft tripled revenue and doubled profits. He made success in some products, such as cloud computing and enterprise tools and the Xbox which help the company keep extremely competitive. Ballmer was regarded as a passionate, aggressive and emotional
leader. For example, the challenges of creating products that more seamlessly combine hardware, software and services, which both Apple and Microsoft faced, “Ballmer took direct management control of the Windows business himself. The company has put a new management structure in place for its operating system business, dividing Mr. Sinofsky’s engineering and business responsibilities between two more junior executives and leaving Ballmer in overall charge.”
5 However, there are such a number of products, which became failures with the unsuitable leadership of Ballmer, including Smartphones, Tablets, Email and social networks and Zune, etc. He was a leader who lacked vision and innovation, or just kept the existing situation of products which were historically dominant, such as Window and Office, rather than push Microsoft into new markets as Mr. Gates did. Because Ballmer thought that Microsoft had been a mature company, the core of his leadership style is to simply keep the company from going backward.
The strategy for Microsoft made by Steve Ballmer was to focus on software, which was seen as a cash cow. “Cash cow is business jargon for a business venture that generates a steady return of profits that far exceed the outlay of cash required to acquire or start it.”6 It belongs to the Boston Matrix shown in the following figure, which has high market share and low market growth rate.
Figure 1 Boston Matrix7
Several years ago, Microsoft changed its business to a devices and services company and made software development as a core asset. Microsoft Cloud strategy and Microsoft’s security strategy were made by Steve Ballmer. Since then, a number of products were launched, including Window 8, Surface, Windows Phone 8, Office 365 and Windows Azure, which connect the consistent users to interface to PCs, tablets, Xbox and so on. Last year, however, “Ballmer explains his plans for a “One Microsoft” by altering the company’s organization around the devices and services vision. The biggest change is the creation of a new operating systems engineering group that will span across console, mobile device, and PC.”8 Generally, Ballmer did not want to change a lot.
1.2 Satya Nadella
Satya Nedella is a thoughtful, quiet leader who has the ability of rallying point, making people work for him. Even though Nadella makes tough calls, he is still a gentleman and always works harder than anyone else.
Nadella earned a bachelor’s degree in electrical engineering, a master’s degree in computer science and business administration, as well as an MBA that he earned by taking weekend classes after he had started at Microsoft. Before joining Microsoft, Nadella was a member of the technology staff at Sun Microsystems. In 1992, he started to work for Microsoft and quickly became known as a leader who could span a breadth of technologies and businesses to transform some of Microsoft’s biggest product offerings.
Previously, he served as vice president of Microsoft’s Cloud and Enterprise group and took responsibility of cloud infrastructure and services business. Besides, he was also vice president of the Microsoft Business Division who led R&D for the Online Services Division. On 4th February 2014, Nadella was appointed as CEO of Microsoft.
As the third CEO of Microsoft, Satya Nadella is cooperative and humble who has a different leadership style compared with Ballmer and Jobs. He has the ability to get Microsoft to loosen up a little and focus on innovation rather than be accused of bringing in a solution that brings in money immediately. Steve Ballmer thought that the passion and hunger of the most talented employees and senior leadership team in the industry for greatness will only grow stronger under Satya’s leadership. At the same time, “Satya is a proven leader with hard-core engineering skills, business vision and the ability to bring people together.
His vision for how technology will be used and experienced around the world is exactly what Microsoft needs as the company enters its next chapter of expanded product innovation and growth,”9 said Bill Gates. “The change of leadership is favoring the company as Microsoft stock has gone up 19% since long-time CEO Steve Ballmer announced his plan to retire last August. Nadella’s introduction as CEO and some important initiatives have caused the stock to go up 8%.”10
The new CEO, Satya Nadella, came up with a new vision that he calls the “mobile first, cloud first world.” In order to make his vision come true, Nadella has introduced Microsoft’s popular Office software for Apple’s iPad. Besides, he planned to give away Windows to makers of small-screen mobile devices. All these strategies were to make Microsoft’s services to be widely used without being limited by the Windows operating system. Different from Steve Ballmer, Nadella pays more attention to mobile and-based computing rather than software, to keep in pace with competitors such as Apple and Google. As for the cloud, he tries to provide one cloud for everyone and every device. In addition, another new strategy with regard to enter technology market and work with other platforms was also put forward by Satya Nadella. The future of Microsoft is operated by these strategies to focus more on cloud or Apps.
2. Different leadership styles motivate employees to achieve goals. Different leadership styles have different effects on the operation of a company. There are some types of leadership to show how employees are motivated to achieve goals. Charismatic leadership is better to motivate employees to take part in teamworking. This kind of managers has a great personality and a strong emotional impact on followers. Transformational leadership pays attention to employee development, depending on visionary leadership to win over followers.
Leaders focus on developing supportive relationships with employees rather than use incentives or other perks to motive change. Managers with transactional leadership motivate employees in practical ways instead of with inspiration. Autocratic leaders do not value employees’ contributions, preferring to manage operations with zero feedback from their teams. Managers who adopt a democratic leadership style encourage employee feedback and participation. Through employ development and training, leaders create effective teams that don’t require close supervision.11
3. The importance of charisma to a CEO’s greatness.
Charisma is definitely a pivotal trait in business leaders and it can make difference when running a company. Men instinctively respond better to managers who pose themselves as leaders and can bring forth success and stability. We have numerous examples of this in a series of successful companies worldwide. The charisma that Steve Ballmer brought into Microsoft was instrumental in changing perceptions that the public had of the company and definitely increased employees participation and passion.
One such example is given by the current CEO of Fiat Group and Chrysler motors, Sergio Marchionne. Marchionne took over these companies at a time of incredible distress when both companies where in huge debt, by radically changing both management practices and corporate strategy he has turned in just a few years Fiat group as of the most profitable businesses in the industry. Wary of the need to change a corporate culture which was bereft of cooperation and full of fiefdoms Marchionne ruthlessly fired most of the managers which were not willing to comply with his new order and established a series of practices which have turned business into a more flexible machine.
4. Being in the right place at the right time could potentially influence a CEO’s greatness. Provide examples from other companies and industries.
Muhtar Kent is the CEO of Coca-Cola Company. He is a very enthusiastic and high-energetic person, like Steve Ballmer. At the same time, Kent is also so humble that he keeps staying in touch with all lower levels of the company, as Satya Nadella shows in Microsoft. Besides, Kent is regarded as a conscientious leader due to his effort and hard work, devoting himself to the company.
Muhtar Kent was born in New York City, NY in 1952 as a Turkish-American citizen. He received a Bachelor of Science degree in economics from Hull University, UK, and a Master of Science degree in administrative science from London University, UK. Before joining Coca-Cola, he had been serving in the military for Turkey. Since April of 2009, Muhtar Kent was appointed as Chairman of the Board and Chief Executive Officer of the Coca-Cola Company.
Kent has been highly involved in each part of Coca-Cola and is concerned with the thought and feelings of his employees. He advocates employees to adapt to new environment, which can provide opportunities for them to learn new skills and achieve greater confidence in their competence. Trying to be an example in the company, Kent hopes that employees can be affected by his behavior positively and act in the same way, in order to establish personal connections with customers. Compared with Steve Ballmer, Kent encourages his employees to innovate rather than rely too much on the past cash cow. He has more similarities about leadership style with Satya Nadella. Under Kent’s leadership, employees in Coca-Cola are motivated to perform better for the company.
Muhtar Kent pays his attention to the brand and its global business, focusing on inner growth instead of investing capital in major acquisitions. However, he has been open to smaller ‘bolt-on’ acquisitions such as the purchase of Vitaminwater. In order to improve the corporate culture, Kent decided to replace two thirds of senior managers in Coca-Cola, who have the ability of engaging with the consumer easily and spotting market openings in their respective regions. According to the commitment to consumer-driven business, Kent attempts to establish better working relationships with Coca-Cola’s 300 bottling partners, spreading all over the world. These companies then constitute part of Coca-Cola’s retail distribution network, providing valuable insight into customers’ behavior within their local markets.
It is beneficial for Coca-Cola to accelerate its overseas expansion and develop international market. “Before his second year as CEO had expired, Muhtar presided over a move to assume direct control over the U.S. market by acquiring what was then Coca-Cola’s largest bottler. Valued at $12.3 billion, it was one of the largest acquisition deals Coca Cola had ever made. The move led to a 65,000 increase in company employee strength, and a growth in revenue of more than $20 billion.”12 Generally, the strategies Muhtar Kent made have a positive effect on the development of Coca-Cola Company.
5. Nadella should promote confidence among Microsoft employees to engage with change. Change management is an approach to transitioning individuals, teams, and organizations to a desired future state.13 There are some key points about management of change.
The first is to move from good intentions to good results. The effective change management is more than just a few pieces of communication. It is the process, tools and techniques to manage the people-side of change to achieve the required business outcome. In the process of change management, some problems arise, such as the size (unsuitable match between leaders and employees), scope (especially in some conglomerate companies with a diversity of business), sector (change as fast as they can, like IT industry) of the company or competition. The reasons for resistance are from two aspects. One is employees, they are afraid of being fired, but still be comfort with the current state because they believe that they would not be paid more even if they work harder.
For a long time, employees may lack confidence and have no ideas about whether they have the ability for the business need for change. Another is managers, who are not aware of the need for change and lacking in required skills may hinder the performance of change management. What is worse, they may not possess a competence of power, control and high sense of responsibilities that a leader must need. The second is about different concerns between changers and changees. Changers are living in the future state, while changees are living in the present. How people experience change is divided into three phases, including current state, transition state (creates stress and anxiety) and future state. Besides, the effective change management must be focused on helping individuals change, not organizations, which is a process involving five building blocks. They are awareness (the need for change), desire (participate and support the change), knowledge (how to change), ability (implement the change) and reinforcement (sustain the change).
The management of change addresses both the technical and the people side. From an organizational perspective, we need to determine what changees can do to help individuals change. What is more, to move beyond good intentions, we need to understand, select and use the tools available to us, including communications, sponsor roadmap, training, readiness and coaching. We also need we need the right people involved and engaged in the right ways. Begin with end in mind. Measure the “right” things for this change, at both the organizational level and the individual level.
While Nadella is taking over as CEO of Microsoft, he intends to make changes of management. Firstly, he plans to leave Microsoft’s Comfort Zone through his knowledge of Internet instead of always keeping focus on the same products. Different from Steve Ballmer who acted aggressively, Nadella show his reputation of collaborating well with others, which is more likely to make for a great business leader. Secondly, Nadella pays his primary attention on cloud service, which can send power or possess other functions.
He hopes to make it possible to turn their laptops into supercomputers with cloud technology. Additionally, Nadella has been focusing on enterprises and he can manage the company as a whole, creating more cohesive products. Even though Nadella spends so much time on cloud service, Microsoft would not give up its phones or Xbox system. Some other management changes are made by Nadella for Microsoft, which are beneficial for the future development of the company.
6. Newly appointment Satya Nadella should communicate corporate visions goals and values. Corporate communication is a set of activities involved in managing and orchestrating all internal and external communications aimed at creating favorable point of view among stakeholders on which the company depends.14 It is the message issued by a corporate organization, body, or institute to its audiences, such as employees, media, channel partners and the general public. Organizations aim to communicate the same message to all its stakeholders, to transmit coherence, credibility and ethic. Corporate Communications help organizations explain their mission and combine its many visions and values into a cohesive message to stakeholders. The concept of corporate communication could be seen as an integrative communication structure linking stakeholders to the organization.
Nadella is burdened with the task to present his corporate goals and visions to thousands of employees scattered across the globe, to achieve this he will have to create a vision that is not only exciting and viable but also not too far away from Microsoft’s current strategy, in order to make it more acceptable by the workers.
7. Team dynamics will be affected by this change in leadership. Team building may be described as a systematic attempt to develop the processes of collaborative functioning within a team (such as communication, problem-solving, decision-making and conflict resolution) in such a way as to help the team to overcome any barriers to effective pursuit of its shared goals.15
The change management contributes to develop a culture that encourages creative thinking and implements new initiatives for an organization. Team dynamics will be affected by this change in leadership in the following aspects. ① A good understanding of the change management can reduce the resistance of employees. If subordinates are told about what the alternatives are and the tradeoffs involved, it is more likely for them to adapt to the corporate environment better. ② With an effective change management, team members share more information and experience with each other. Mutual communication is beneficial for them to arrange reasonable work, implement tasks effectively, do useful assessment and so on. ③ Generally, employees show more interest in job opportunities offered by other companies.
The change management team tries to re-recruite the good people. It is a high-risk change to assume the key employees are going to remain in the team just because they haven’t publicly announced their plans to leave. ④ Change management helps team members create new ideas instead of keep old methods and established practices through educating them all levels of the organization. The dynamics at work and the circumstances driving the changes are addressed and explained clearly. People are more willing to accept new values and beliefs about the company. ⑤ Organizations usually response slowly to a change of management. As a result, team members would pay more attention to protect themselves rather than devote themselves to developing productivity and profitability.
Team dynamics of Microsoft is a flexible, powerful business solution for customer relationship management (CRM) and enterprise resource planning (ERP) that can help make your people more productive and can grow with your business.16 Microsoft made change management at device division. Facing the competition with a number of new smart phones, netbooks, e-readers and tablet PCs from rivals, Microsoft planned to develop a new smart phone operating system. Customer’s loyalty towards iPhone, HTC is an issue that Microsoft should take into consideration to change.
8. Plan and deliver the assessment of the development needs of individuals involved in this change in senior management and evaluate the success of the assessment process.
A needs assessment is a systematic process for determining and addressing needs, or “gaps” between current conditions and desired conditions or “wants”. The discrepancy between the current condition and wanted condition must be measured to appropriately identify the need. The need can be a desire to improve current performance or to correct a deficiency.
17. Needs assessments are regarded as a costly and labour-intensive way to determine customer needs and wants for products and services. There is the process when a needs assessment is planned. At first, the issues and audiences should be confirmed. Then, the company starts to establish the planning team and determine the goals and objectives. To better enter the market, managers ought to characterize the audience and conduct information and literature search. Selecting data collection methods is a vital step for further analysis. After choosing the sampling scheme and designing and piloting the collection instrument, individuals need to gather and report data, and then to analyze and manage. The last stage is about synthesizing data and creating report.
There are two ways to conduct needs assessments, one is internal assessments, an “inside-out” approach, and another is external assessments, an “outside-in” approach. Internal assessments mean that an organization focus on setting its realistic goals and measurable objectives, evaluating its mission, and achieving a better understanding of the organization’s internal values, attitudes and visions for the future.
With an “inside-out” assessment, individuals are given valuable input into their own task evaluations and are allowed to become active participants in the direction of the organization. External assessments mean that an organization is aware of and establish relationships with its various constituents. The general public by the understanding of the opinions, attitudes and the needs of those external constituents toward natural resources and outdoor recreation is also guaranteed by the organization.
Both internal and external assessments are beneficial for an organization to improve programs and to build strong relationships. Individuals’ awareness of the program priorities and the general population produces long-term benefits to natural resource and outdoor recreation agencies and facilitates the development of plans that address important priorities.
18. Change management will have to address mostly senior and upper level management, which are the most essential for the company and at the same time the more difficult to change, as they represent a source of ideas and innovation. Nadella will have to approach this issue from two different aspects, the first being firing of reassigning managers which are not complying with his new policies, on the other hand trying to keep the best individuals and using them to his own advantage to create a more solid enterprise.
In this report, we discuss that different leadership styles has different influences on a company. As an example of Microsoft, the former CEO Steve Ballmer and the present CEO, Satya Nadella acts differently in personality, background, career, leadership style and strategy made for Microsoft. Ballmer is enthusiastic, energetic and intransigent, while Nadella is cooperative and mellow. Besides, another CEO of Coca-Cola is analyzed through the same aspects. For a corporate, communication plays a vital role in management.
Team building and team dynamics are affected by change management of leadership, which needs Nadella to take some positive and effective measures. At last, the assessment of the development needs can not be ignored, which help Nadella to know more information and perform well in the future. In conclusion, this article compares leadership styles of two CEOs of Microsoft and explains some other relevant aspects to gain a better understanding.
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